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[dropcap] T[/dropcap]he question of how money is created has far-reaching implications for research and policy. Surprisingly, despite the longstanding controversy, until now no empirical study has tested the theories. This is the contribution of the empirical study by Professor Richard Werner confirms. An empirical test is conducted, whereby money is borrowed from a cooperating bank, while its internal records are being monitored, to establish whether in the process of making the loan available to the borrower, the bank transfers these funds from other accounts within or outside the bank, or whether they are newly created.

This 2014 study establishes for the first time empirically that banks individually create money out of nothing. The money supply is created as ‘fairy dust’ produced by the banks individually, “out of thin air”. More studies from Professor Werner are here.




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For the next Steps visit: Do Banks Loan You Money When Making A Loan?

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